Facing Oil and Gas Industry Challenges: Is It Time To Change?

The oil and gas industry has faced and still faces some daunting challenges. In the past, it has risen to oil and gas challenges such as producing from offshore fields, starting from shallow shelf locations to deeper waters where we are now drilling and producing in water depths of over 3,000 meters (10,000 ft.). Onshore we have solved the challenge of recovering oil and gas from shale zones and tight sands previously considered economically impossible; accomplishments that would be acknowledged with pride in any industry.

Still the industry faces challenges that will take innovation and new technologies to overcome. Some of these are:
• The continuation of exploration and development into ultra-deep water depths
• Temperatures and pressures beyond current equipment capabilities, and
• Finding economical solutions that will enable progress into the coming decades
This is even more formidable considering the industry’s traditional processes for tackling technical challenges.

Typically, industry players work in silos where ideas and technologies are developed by individual companies without outside assistance. There are several drawbacks to this approach:
• Resources are limited to those available within the organization
• Thinking can be narrow and without innovative thinking from a broader perspective
• All existing knowledge of potential solutions may not be available, and
• The cost of research becomes the burden of one organization
History shows that great breakthroughs are built on past information and often on collaborative effort.

Protection of perceived Intellectual Property (IP) is a substantial barrier to collaboration, especially between competitors. Development of concepts in a restricted and narrow environment often means expensive and ineffective solutions. It may also mean that some industry players will not be able to contribute or benefit. Perhaps a more global view for addressing challenges as an industry would provide quicker and more viable results.

Nevertheless, concepts and ideas still appear and are ready for implementation. However, the oil and gas industry is a conservative culture such that new ideas and technologies are very slow to be utilized. There is an overwhelming reluctance to be a pioneer and adopt new technologies quickly. Most companies do not want to be the first to use new ideas or technology and prefer for others to take the lead. Where other industries are quick to embrace and cultivate new technology, the industry is slow to accept new technology. It has been said that acceptance of new technology takes about 10 years and much longer to become a standard solution.

Perhaps it is time to look critically at how we confront new challenges. Can we change how we approach Industry collaboration on technology, such as bringing together all of the industry’s knowledge and expertise for the common purpose of solving problems for mutual benefit? Can we share the cost of research and development to ease the burden on a single organization or to avoid delaying development until costs can be supported by a project? Can we take a critical look at IP sharing and move away from silos of information and knowledge to collaborate?

Changing the Game
What will it take to change the industry? The ideas above are challenging and it will take an evolution of thinking to improve how the industry moves forward. Here are some thoughts on changing the way the Industry currently undertakes challenges.

• JIPs: This is an industry accepted vehicle for research and development. It is a good way to share costs, collaborate, and work on finding solutions. Unfortunately, it is underutilized and protection of IP is often a hurdle that must be overcome, especially when competitors are involved. For example, Endeavor has formed several JIPs including Subsea Decommissioning, Best Practices in Shale Completions, and Best Practices for the FPSO Industry.

• Sharing information: Again, protection of IP often gets in the way. However, shared information can accelerate new technology development, as well as provide sound concepts, that can help solve industry challenges. It provides a solid foundation, based on previous work or knowledge.  Often service companies can utilize Customer Advisory Boards or other best practices to create collaborative environments.

• Quickly embrace new technologies: Take advantage of new ideas that offer better efficiency and cost reductions. Innovative ideas are abundant in this industry, but technical leadership is needed from industry leaders to move more quickly. Find ways to quickly prove new technology instead of waiting for others to be first users. Examples include: Extended rigorous qualification, prototype testing in smaller scale or in less challenging environments to validate a concept, or participating in JIPs to fund supplier or contractor development.

• Industry collaboration: Significant experience and knowledge exists within the industry, yet it is isolated in IP silos. Bringing to bear all of industry’s capability on common challenges could be game-changing in terms of solutions and cost sharing, and beneficial to all.

The oil and gas industry faces some significant challenges and will continue to find challenges as it searches for and produces hydrocarbons in remote and difficult environments. If the industry continues to pursue solutions using the same methods and processes without evolving its thinking, the path will continue to be convoluted and costly.

For more articles on how you can face oil and gas industry challenges, please visit our website: https://endeavormgmt.com/oil-and-gas/expert-advisory-group.